Introduction: The International Financial Services Centres Authority (IFSCA) is at the forefront of ensuring compliance with Anti Money Laundering (AML), Counter-Terrorist Financing (CTF), and Know Your Customer (KYC) guidelines within the International Financial Services Centre (IFSC). In a recent circular, the IFSCA has made significant modifications to the existing guidelines. This article delves into these modifications and their potential implications for regulated entities within the IFSC.
1. Expansion of Terminology: The IFSCA has introduced the term ‘Financial Group-wide level or Group-wide level’ in sub-clause (c) of clause 2.1 of the Guidelines. This modification expands the scope of application to the financial group level, ensuring a comprehensive approach to AML and CTF.
2. Rule Amendments: The circular highlights the amendment of the Prevention of Money-laundering (Maintenance of Records) Rules, 2002. This change is significant as it aligns the IFSCA guidelines with the latest rule amendments, promoting consistency and regulatory alignment.
3. Immediate Reporting: In sub-clause (a) of clause 6.2, the IFSCA replaces “within 2 days” with “immediately.” This alteration emphasizes the need for swift and real-time reporting, enhancing the effectiveness of AML and CTF measures.
4. Group-wide Programmes: The term ‘group-wide policy’ is replaced with ‘Group-wide programmes’ in various sections of the Guidelines. This change highlights the shift towards a broader and more holistic approach to AML and CTF across financial groups.
5. Trust Information: The circular introduces new requirements regarding trust information, including beneficiary details, trustees, settlors, protectors, and more. This addition aims to enhance transparency and due diligence in trust-related transactions.
6. Implementation of Group-wide Programmes: Clause 12.1 under Chapter-XII emphasizes the need for Financial Groups to implement Group-wide programmes to fulfill obligations under relevant provisions. This aligns with international standards for AML and CTF measures.
7. Information Sharing Safeguards: The Guidelines now specify safeguards to prevent tipping-off in the exchange of information between Financial Groups. This addition promotes responsible and secure information sharing.
8. Conclusion: The modifications made to the IFSCA Guidelines for Anti Money Laundering, Counter-Terrorist Financing, and Know Your Customer in 2022 are indicative of the evolving regulatory landscape. These changes reflect a more comprehensive and stringent approach to AML and CTF measures, emphasizing real-time reporting, information sharing safeguards, and a group-wide focus. Regulated entities within the IFSC should promptly adapt to these modifications to ensure continued compliance and alignment with international best practices in financial regulation. The circular underscores the IFSCA’s commitment to maintaining a robust and vigilant financial ecosystem within the International Financial Services Centre.
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International Financial Services Authority
Circular No. F. No. 822/IFSCA/FATF-C/Legal/2022-23 /03 Dated: 23rd October 2023
To,
All the Regulated Entities in the International Financial Services Centre (IFSC)
Subject: Modifications under the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022.
Sir/Madam,
A. Reference is drawn to the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022 (hereinafter referred as ‘Guidelines’) issued vide notification IFSCA/2022-23/GN/GL001 dated October 28, 2022, by the International Financial Services Centres Authority (hereinafter referred as ‘Authority’).
B. Further vide Gazette notification dated G.S.R. 745(E). dated 17th October 2023, Government of India has amended the Prevention of Money-laundering (Maintenance of Records) Rules, 2002 (hereinafter referred as ‘Rule’). Accordingly, the Authority hereby specifies the following modifications, in the aforesaid Guidelines:
1. In sub-clause (c) of clause 2.1 of the Guidelines, after the words ‘enterprise-wide level’ and before the words ‘wherever applicable’ the words ‘(Financial Group-wide level or Group-wide level)’ may be inserted.
2. In clause 5.4.8 of the Guidelines, for the words ‘proviso of rule 9(1)(b)’, the words ‘second proviso of rule 9(1)(c)’ shall be substituted;
3. In sub-clause (a) of clause 6.2 of the Guidelines, for the words “within 2 days” the words ‘immediately’ shall be substituted;
4. In point (i) of the proviso to sub-clause (c) of clause 6.2 of the Guidelines, for the words ‘group-wide policy’, the words ‘Group-wide programmes’ shall be substituted.
5. In point 5 (a) (i) of the Guidance note to clause 10.3 of the Guidelines, for the words ‘within 7 days of arriving at a’, the words ‘promptly on’ shall be substituted;
6. After sub-point (d) of the clause 8(iii) of Part-II of the Annexure-I of the Guidelines, the following shall be inserted: –
‘(e) the names of the beneficiaries, trustees, settlor, protector, if any and authors of the trust and the address of the registered office of the trust; and
(f) list of trustees and documents as are required for individuals under sub-rule (4) of rule 9 of the Rules and Guidelines for those discharging role as trustee and authorised to transact on behalf of the trust’.
7. In clause 12.1 of the Chapter-XII of the Guidelines,
(i) In sub-clause (a), for the words ‘group policy’, the words ‘Financial Group’s programmes (Group-wide programmes)’ shall be substituted;
(ii) In the third line of sub-clause (a), for the words ‘The group policies’, the words ‘These Group-wide programmes’ shall be substituted;
(iii) In sub-clause (b), for the words ‘group policy’, the words ‘Group-wide programmes’ shall be substituted;
(iv) In sub-clause (e), for the words ‘group policy’, the words ‘Group-wide programmes’ shall be substituted;
(v) After sub-clause (e), the following new sub-clause shall be inserted: –
‘(f) Financial Groups are required to implement Group-wide programmes for the purpose of discharging obligations under the provisions of Chapter-IV of the Act, Rules and Guidelines.’
8. In clause 12.2 of the Chapter-XII of the Guidelines,
(i) In the title of clause 12.2, for the words ‘Group Policy’ the words ‘Group Wide Programmes’ shall be substituted;
(ii) The sub-clause (a) shall be substituted as follows: –
‘(a) has developed and implemented Group-wide programmes against ML/TF, including group- wide policies and procedures for sharing of information required for the purpose of CDD and ML/TF risk management;’
(iii) In sub-clause (b) after words ‘exchanged’ and before the words ‘between’, the words ‘, including safeguards to prevent tipping-off’ shall be inserted;
C. All other provisions specified in the Guidelines and circulars issued thereunder shall remain unchanged.
D. Copy of the circular is available on the IFSCA website at https://ifsca.gov.in/Legal/Index/TCce8MyOmco= .
Ramachander S.S.R. Eranki,
Head, AML & CFT Division,
[email protected]
